living on low or tight income - how to make the most of what you have
If you’re on a low or tight income, here’s some tips for how to be the best manager of what you have.
There are times in our lives where income is tight - those gloriously stressful “low income phases”. Maybe you’re studying, a stay-at-home-parent (or soon to be), a carer, just separated or divorced, just moved cities, you’re a single parent, working in a lower income job (that you love), tackling years worth of debt, or building a side hustle or business and you’re deliberately keeping things tight to save up! No matter which of these apply to you there is absolutely no judgement here. But just because you don’t earn as much as others, doesn’t mean you can’t be a BOSS at managing your money. Remember that it doesn’t matter how much money you have, what matters is how you manage what you DO have.
Before reading these points we do want to say that if you’re struggling with your mental health because of money stress, please seek the support or help you need. Chat with your GP, or check out this list of support services available for a range of personal situations that could be useful. Sometimes, we just need help.
Here’s some tips to be the best manager of your money through these tight income times 🔽
master your mindset
First up we need to manage our mindset when it comes to money. When income is low or tight, the first thing you might feel is *stressed*. You may think things like “there’s just not enough money for everything” and find yourself using phrases like “I can’t afford that”. These phrases suck, we totally get it. Take a deep breath - let’s work together on staying positive. There are many things we can do to make your situation more manageable. If you’re literally starting again from scratch, check out our blog about turning over a new financial leaf - it could help.
We all have experiences in the past that shape the way we think about money. The best place to start when learning how to manage your money well [no matter how much there is] is your money mindset. The more positively you feel toward money, the less it will stress you out, and the more effective you can be with what you have. So what has shaped your perspective on money? Your childhood maybe? A good or bad experience in recent years? Think through how you got to your current perspective on money. Have some grace with yourself! Experience has an amazing way of leaving a mark on our future behaviour - we all have scars.
Now think through how you want it to be. Remember to be realistic (fun fact: not all of us will become millionaires - or even want to lol). It’s ok if right now you aren’t saving much money. The best thing you can focus on is not going into consumer debt - let’s not go backwards. Let’s focus on keeping this ship steady, not sinking.
The most important thing to remember when managing money is what IS within your control. So much in our environments impacts our money, and many of them we have zero control over - let’s not get hung up on those. Let’s focus on the really practical things you actually have control over.
Check out what Oscar Wilde said:
“True contentment is not having everything, but in being satisfied with everything you have.”
Dang that’s good. Let’s focus on being content with what you have, and let’s maximise every dollar coming your way.
uncompare yourself
Now is the time to check in on what’s influencing you - is social media making you feel like trash because your mates look rich and you have -$17.35 in your account? If social media is making you feel like dirt on the daily, maybe it’s not a healthy thing for you right now. Comparison is the thief of joy, so let’s put some barriers in the way of comparison. Perhaps limiting your time on socials is a helpful thing, or deleting the apps temporarily or forever is something to consider (shock horror!). First up, know that just because someone looks rich on a post, doesn’t mean they are rich (fyi a lot of people use debt to look rich in front of others). Let’s not go broke trying to impress people we don’t really like, right?
Let’s get in the zone of personal bests - let’s impress ourselves. This is your life - not someone else’s, so let’s make you proud. You know what’s way more impressive than someone with an Instagram-able house, nice clothes or a luxury car? Someone who has worked really hard to improve their situation against the odds, in this case, limited income. That’s solid stuff friend, and what you’re doing takes skill. Be proud. Flex a lil.
Also, remember that not having much money doesn’t equal no fun. That is a filthy lie the world tells you. Let’s prove the world wrong, shall we?
Start by surrounding yourself with positive influences, media and voices that impact you in a fun, positive and constructive way. Ensure you have a solid support network of brilliant friends and/or family who love you and support you. Follow Instagram accounts, YouTube channels and media that uplift and inspire you! Anything that makes you feel ugh, tuck it away.
focus on the core essentials
You need somewhere to live, transport to move (public or private), basic bills covered and food on the table. These 4 areas are your main focus. Of course everyone would love to have money for everything we ever want, but sometimes we need to remind ourselves of the essential things.
With the cost of your expenses you want to stay focused on spending less than you earn. Create a spreadsheet (or grab a pen and paper) to compare your income to your expenses and see where there’s room for improvement. Set up a separate bank account for your fixed expenses and transfer money into this account each pay cycle to cover these costs. Grab a calculator and determine how much these items are costing you each week and aim to have that money automatically transferred into this account each time you’re paid.
What do you do if you’re spending more than you earn? Something’s gotta give. It may only be for a short while, but look for ways to cut back on your basic expenses. Check out cheaper phone deals, see if living with others can reduce housing costs, if groceries are cheaper at a different supermarket - really dig deep.
slice off or exchange the non-essentials
Instead of buying coffee out, you’re making it at home in a travel mug. It can still be delicious and wake you up enough to listen to that boring uni lecturer or tackle your toddlers tantrums with the necessary caffeine buzz. That premium music subscription you paid for in the past can now be switched to the free version with ads. Those clothes you own can be reworn - everywhere. This is your time to get ruthless on spending and luxuries - time to be strong and super creative. Wherever possible look to exchange the spending of dollars, for the free/cheaper version of that thing, whatever that looks like. Here are some options to get you started:
as covered above, make tea or coffee made at home and enjoy it in a travel mug
source new clothing items sourced from op shops, online marketplaces or swap with friends
make lunches at home instead of bought out
rotate streaming services one by one or utilise free options available through free-to-air channels and libraries
find furniture for free or super cheap on online marketplaces and chuck in some DIY time to make it yours
exchange your gym membership to use the outdoor gyms at a local park, at home YouTube workouts or go for a walk with a friend
Keep reading below - we have a big list of ways to source discounts and deals!
ensure you’re getting the best deal on everything
Now is the time to call your providers and ensure you’re getting the best deal - on everything you pay for. Call every single business you pay money to and ask about any offers they have for people in your situation, any chances of reviewing your deal, and if there’s they’re still not offering the best deal - change providers. If you haven’t reviewed your mortgage in a while chat with your mortgage broker or bank. If switching supermarkets gets you cheaper groceries, do it. If catching the bus to work frees up some petrol related costs, find that nearest bus stop. You need to become the master of the deal - don’t be afraid to call and negotiate (kindly), and move to a provider that fits your budget.
tackle your debt & never return to it
One of your major goals in managing money through a tight period is to not get into any more debt - stay out of debt at all costs. That means no credit cards, personal loans or buy-now-pay-later schemes. Steer clear.
If you do have debt, use the debt snowball to pay them off slowly once you know what’s leftover after your core essentials for living are covered (housing, transport, basic bills and food). The debt snowball works by listing all your consumer debts from smallest to largest. Then set up the minimum repayments required for each debt. Pay a little extra on your smallest debt and pay that one off. Once that first debt is gone, redirect those extra repayments to the next smallest debt. Do this ongoing until all debts are gone. Get this done before moving onto any other goals.
If debt is a persistent and large problem please call the National Debt Helpline - they have a bunch of resources available to help manage personal debts. Remember that help is sometimes the hand we need - grab it.
be cool with putting savings, giving & investing on hold
When you’re managing a low income saving money won’t be as easy - you won’t necessarily see big piles of savings grow. Likewise you won’t necessarily be investing in shares or property, or have the cash to be giving to your favourite charities or organisations at this point. And that is perfectly, sublimely ok. Right now we need to focus on sustaining your basic needs and health. If you’re drowning in debt or not able to meet your basic needs we shouldn’t be focused on trying to direct money towards these things just yet. You matter and we need to support you first. If you’re income grows then you can start to make contributions to these areas, but let’s get there at a good pace.
research any support or financial programs available to you
Check out any state/territory or federal initiatives available to support your situation - that could be anything from financial support for after school care for your kids, to student payments to the Disability Support Pension (DSP). These programs may not cover all your costs but they can certainly provide some assistance. And we know it can be completely painful filling in forms or being on hold for 1.5hrs, but it’s so worth pushing through those things to get any support you can. Call a friend over to help you wade through it all so it isn’t totally overwhelming. Check out the Services Australia website to search through federal options and check out your specific state or territory government website to see what they’re currently offering support for. Do not feel bad or guilty for accessing these payments or services - they exist to support many Australians who require assistance and they’re an amazing feature of our social structure! You deserve to receive support.
use an effective money management system
What’s your money management system? Is it working, or not? Don’t worry if it isn’t, because at least you now know that! You can start to turn things around. It may take a few pay cycles to really reap the benefits but it can happen if you find a system that suits your situation.
The major principles to stick with in managing your money are:
generally spend less than you earn
try to keep housing below 30% of your take home pay (even lower is great!)
ensure there aren’t any loose direct debits coming out you don’t know about
give every dollar a job - if there’s anything leftover once your core expenses are covered, save it in a separate bank account
keep your savings separate to your everyday account (but if you aren’t able to save right now don’t stress)
transfer your core living expense money into a separate account that you can’t touch so you aren’t tempted to spend it
automate transactions in your online banking to keep your hands off it
To be totally honest it doesn’t matter what system you use, so long as it works. Pen and paper could be all you need, or a spreadsheet where you compare your income and expenses. If you need help check out the Glen James Spending Plan, or check out just the spreadsheet version.
get good at sourcing free stuff, discounts and deals
Now’s the time to get really good at finding bargains, discounts and freebies:
swap your gym membership for free YouTube workouts or meet up with friends to exercise.
meal prep like a wizard to save on food, and more generally make it a thing to cook at home to save (Joshua Weissman does a sweet cheap meals series on YouTube).
utilise free transport options like bike riding, discounted travel by sharing with housemates or utilise public transport.
maximise birthday discounts where businesses offer deals if its your birthday.
when hanging with friends/planning a date night play board games, have a picnic at a park or beach and create movie nights at home using free entertainment streaming services from public broadcasters and local libraries (honestly, libraries slay. The free stuff they offer is cray.).
chat with other parents to take turns looking after the kids so you can catch a break without paying for a babysitter.
get to know your local bar happy hours and buy drinks cheaps with friends after class.
utilise the free entertainment on YouTube, streaming services from public broadcasters and libraries.
on the topic of libraries - they have so many services available for free! Free internet, free books for you and/or the kids, space to study or work, printing services, music classes and story time for toddlers, seed libraries - so much stuff. Call them or visit, become a member and capitalise on all their services.
toy libraries for kids! For a small price a year you can borrow toys without having to fork out major cash to keep your little ones entertained. Borrow kids books too! Nothing like a bit of imagination time for freeee.
become the master of rewards programs through supermarkets and their chains of stores. Collect points to reduce your grocery spend or buy things you need using gift cards exchanged for points.
do whatever you can to add a little extra income - check out side hustles like online surveys, dog walking, house sitting, tuition, selling your old stuff (including uni textbooks) - anything you have skill or potential to do to increase income, see how you can make a few bucks from it.
